Published: December 16, 2004

Stocks rose for a third day as results from Lehman Brothers bolstered optimism that profits at Wall Street brokerage firms would top estimates.

''Corporate earnings are right where companies wanted them, or higher,'' said Bob Basel, managing director of equity trading at Citigroup in New York. ''It's a very good sign for the economy. The market is generally in a rally mode.''

Benchmark indexes climbed even as oil prices had their biggest increase in six months. The Standard & Poor's 500-stock index closed at its highest level since Aug. 3, 2001, rising 2.34 points, or 0.2 percent, to 1,205.72.

The Dow Jones industrial average gained 15 points, or 0.1 percent, to 10,691.45, a level not seen since February. The Nasdaq composite index rose 2.71 points, or 0.1 percent, to 2,162.55, its highest close since June 2001.

Lehman, the first Wall Street firm to release results, rose $2.25 to $87.90. Its fourth-quarter profit increased to $1.96 a share, lifted by trading revenue and fees from offering mergers and underwriting advice. Lehman, the nation's No.5 securities firm, was expected to earn $1.69 a share, according to the average estimate of analysts polled by Thomson Financial. Earnings in 2005 may be higher than this year, the company said.

Crude oil surged more than $2 a barrel after the government reported a decline in inventories of heating oil as below-normal temperatures increased demand. Oil for delivery in January climbed 2.3 percent, to $44.19 in New York.

''If energy prices continue to move higher, they can curtail this rally a little bit,'' said Thomas Garcia, head of trading at Thornburg Investment Management, in Santa Fe, N.M. ''The more people spend on gas, the less they have to spend on Christmas gifts and other things.''

Energy-related shares gained as oil prices surged and Prudential Equity Group raised its ratings for Sunoco and Marathon Oil to overweight from neutral.

Shares of Sunoco, the biggest oil refiner in the Northeast, climbed $3.64 to $84.39. Marathon advanced 53 cents to $37.55 a share.

Sprint lost $1.08 to $24.02 a share after agreeing to buy Nextel Communications for about $35 billion, bolstering its No.3 position in the mobile telephone industry. Shares of Sprint had climbed 12 percent in the previous four trading days as investors anticipated the merger. Nextel slipped $1.29 to $28.70.

Shares of Guidant and Veritas Software advanced amid speculation that the companies may be acquired. Guidant, the maker of devices to treat heart and circulatory ailments, gained $1.05 to $72.05. Johnson & Johnson is negotiating to pay $75 for each share of Guidant, people familiar with the talks said. Shares of Johnson & Johnson slipped 53 cents to $60.90.

Veritas gained 73 cents to $28.11. Shares of Veritas, which makes data-storage software, have jumped 12 percent on reports that it is in talks to be acquired by Symantec for more than $13 billion. Symantec, the world's largest maker of security software, slipped 7 cents to $27.38.

In the bond market, the 10-year Treasury note gained 13/32, to a price of 101 14/32. The note's yield, which moves in the opposite direction from the price, dipped to 4.07 percent from 4.12 percent on Tuesday.